SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-13338
INFOAMERICA, INC.
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(Exact name of registrant as specified in its charter)
Colorado 84-0853869
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(State of other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
2600 Canton Court, Suite G Fort Collins, Colorado 80525
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(Address of principal executive offices)
(970) 221-5599
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[X] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
As of March 31, 1999, Registrant had 5,214,521 shares of its $0.025 par
value common stock issued and outstanding.
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<TABLE>
<CAPTION>
BALANCE SHEET
ASSETS
March 31, 1999
Unaudited Audited
3/31/99 12/31/98
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<S> <C> <C>
Current assets:
Cash ...................................................... $ 143,467 $ 93,557
Accounts receivable:
Trade, net of allowance for
doubtful accounts of $-0- .......................... 54,388 70,295
Short term loans to officers .............................. 5,000 17,147
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Total current assets ............................... 202,855 188,999
Property and equipment, at cost:
Furniture and fixtures .................................... 35,344 35,344
Vehicles .................................................. 52,170 52,170
Computer equipment ........................................ 38,828 38,828
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126,342 126,342
Less accumulated depreciation ......................... 74,205 71,605
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Net property and equipment ......................... 52,137 54,737
Other assets:
Deposits .................................................. 1,598 1,598
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Total Assets .............................................. $ 256,590 $ 237,334
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<CAPTION>
INFOAMERICA, INC.
BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
March 31, 1999
Unaudited Audited
3/31/99 12/31/98
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<S> <C> <C>
Current liabilities:
Accounts payable .......................................... $ 25,149 $ 34,931
Accrued interest .......................................... 57,598 57,598
Accrued profit sharing plan
contribution .......................................... 845 845
Customer deposits ......................................... 129,092 40,000
Accrued bonuses and expenses due
officers .............................................. 82,014 99,153
Advances Payable to Officers ............................. 11,979 11,979
Current Portion of Notes Payable .......................... 5,796 7,597
Convertible notes payable ................................. 14,000 15,000
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Total current liabilities .......................... 326,473 267,103
Long-term liabilities:
Notes Payable-Vehicles .................................... 24,313 24,313
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Total Long Term Liabilities ................................... 24,313 24,313
Stockholders' equity (deficit):
Preferred stock, $1 par value;
5,000,000 shares authorized,
none issued ........................................ -- --
Common stock, $.025 par value;
900,000,000 shares authorized,
5,214,521 shares
issued and outstanding ............................. 130,363 130,363
Additional paid-in capital ............................ 1,989,034 1,989,034
Accumulated deficit ................................... (2,213,593) (2,173,479)
Total stockholders' equity (deficit) ............... (94,198) (54,082)
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Total Liabilities & Stockholder Equity ................ $ 256,590 $ 237,334
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</TABLE>
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<TABLE>
<CAPTION>
INFOAMERICA, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 1998 and 1999
(Unaudited)
For the QTR For the QTR 12 Months
end 3/31/99 end 3/31/98 end 12/31/98
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<S> <C> <C> <C>
Software Sales ......................................... $ 81,170 $ 86,199 $ 466,106
Consulting and other sales ............................. 5,163 18,094 38,719
----------- ----------- -----------
TOTAL INCOME .................................. 86,334 104,294 504,825
=========== =========== ===========
Expenses
General & Admin ............................... 126,449 91,337 467,160
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TOTAL EXPENSES ................................ 126,449 91,337 467,160
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Net Income (Loss) ...................................... (40,115) 12,956 37,665
=========== =========== ===========
Net Income (Loss) Per Share ............................ (.01) * .01
Weighted Average ....................................... 5,214,521 3,405,731 5,214,521
</TABLE>
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<TABLE>
<CAPTION>
INFOAMERICA, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the 3 months ended March 31, 1999
(Unaudited)
Common Stock Additional
-------------------- Paid-In Accumulated
Shares Amount Capital Deficit
------ ------ ---------- -----------
<S> <C> <C> <C> <C>
Balance, December 31,
1998 ................ 5,214,521 $ 130,363 $ 1,989,034 ($2,173,479)
Loss for the 3
months ended
March 31, 1999 ...... -- -- -- ($ 40,115)
Balances,
March 31, 1999 ...... 5,214,521 $ 130,363 $ 1,989,034 ($2,213,594)
=========== =========== =========== ===========
</TABLE>
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<TABLE>
<CAPTION>
INFOAMERICA, INC.
STATEMENT OF CASH FLOWS
For the 3 months ended March 31, 1999 and 1998
(Unaudited)
1998 1999
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<S> <C> <C>
Cash flows from operating activities:
Net income (loss) .............................. $ 12,956 $ (40,115)
Adjustments to reconcile net income (loss)
to net cash (used in) operations:
(Increase) decrease in officers loans .......... -- 12,147
Depreciation and amortization ................. -- 2,600
(Increase) decrease in trade accounts
receivable ................................ (2,333) 15,907
Increase (decrease) in accounts payable ........ (4,308) (9,782)
Decrease in salaries payable ................... (13,845) (17,139)
Increase (decrease) in accrued liabilities ..... (1,501) (2,801)
Increase in customer deposits .................. 25,000 89,092
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Total Adjustments .................... 3,013 90,025
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Net Cash Generated in Operations .......... 15,969 49,910
Cash flows from investing activities:
Proceeds from sale of fixed assets ............. -- --
Purchases of property and equipment ............ -- --
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Net Cash Used in Investing Activities ..... -- --
Cash flows from financing activities:
Payments on lease .............................. -- --
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Net Cash Used in Financing Activities ..... -- --
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Net Increase in Cash ............................... 15,969 49,910
Cash Balance at Beginning of Period ................ 50,255 93,557
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Cash Balance at End of Period ...................... $ 66,231 $ 143,467
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</TABLE>
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INFOAMERICA, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 1999
1. Basis of Presentation
The balance sheet at March 31, 1999, and the statements of operations and
cash flows for the three months ended March 31, 1999 and 1998, have been
prepared by the Company without audit. In the opinion of management the
accompanying unaudited financial statements contain all adjustments (consisting
of only normal recurring accruals) necessary for a fair presentation of the
financial position as of March 31, 1999, and the results of operations and cash
flows for the periods ended March 31, 1999 and 1998.
The financial statements have been prepared on a going concern basis which
contemplates the realization of assets and liquidation of liabilities in the
ordinary course of business. As shown in the accompanying financial statements,
the Company has incurred significant recurring losses and at March 31, 1999, the
Company has a working capital deficit of $123,818 and a stockholders' deficit of
$94,198. As a result, substantial doubt exists about the Company's ability to
continue to fund future operations using its existing resources.
The Company intends to pursue the fast food industry during 1999 in an
effort to expand its presence with major chain accounts for the Company's order
entry software. The Company intends to reduce operating expenses where
appropriate and attempt to secure consulting contracts with current as well as
new customers. Although the Company is hopeful these strategies will be
successful, there is no assurance that sufficient cash flows will be generated
to fund current operations.
The financial statements do not include any adjustments that might be
necessary should the Company be unable to continue as a going concern.
2. Income Taxes
No provision for income taxes is required at March 31, 1999 and 1998
because, in management's opinion, the effective tax rate for the year will be
zero.
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3. Net Income (Loss) per Share
Net income (loss) per share is based on the weighted average number of
shares of common stock outstanding during the three month period ended March 31,
1999 and 1998.
4. Subsequent Event
During 1998 and the first three months of 1999, the Company actively
pursued merger opportunities as a method to provide liquidity to shareholders.
Based on the events during the second half of 1998 and the first three months of
1999, the Company anticipates that it will enter into a contract to acquire
three privately held corporations which together own and operate a small cable
television business in Tehachapi, California. The Company believes this cable
business has a value in excess of $2.0 million . In connection with the
anticipated transaction, the Company would issue securities equivalent to
approximately 80% of the Company's voting common stock. Following the
transaction, the Company would assume operation of the cable television
business. Upon completion of the transaction, which would be expected during the
second quarter of 1999, the present officers and directors would be replaced by
management of the acquired corporations. At the time of completion of the
transaction, the Company would sell the assets utilized by the Company to its
present management in consideration of cancellation of obligations owed to such
persons and termination of long term employment contracts and options. There is
no assurance such a transaction will be completed as anticipated.
5. Year 2000 Compliance
As of March 31, 1999, the Company was in the process of upgrading its
proprietary Touchware 5.0 software package to be year 2000 compliant and
reviewing Y2K issues affecting its business. It is anticipated that all
customers will be upgraded to the new Y2K version of the Company's software by
June, 1999. Costs associated with completing this Y2K upgrade are expected not
to exceed $20,000. This has been an important development project as one of the
Company's largest customers has made it a requirement that Touchware 5.0
software product be Y2K compliant by June 30, 1999. At the present time, this
development effort is proceeding as planned and the Company's anticipates
successfully completing the conversion to Y2K compliance by June 30, 1999. We
have employed outside consultants to assist in this compliance process and none
of these experts believe there will be any problem complying with Y2K
specifications. The Company's internal systems are totally manual and will not
be impacted by Y2K computer software problems. The Company does not anticipate
that Y2K readiness of the computer systems of its suppliers or customers will
affect the Company's business; however, like all businesses, and particularly
businesses in the technology sector, the Company can give no assurances that it
will not be adversely affected by Y2K problems of others.
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I. CHANGES IN FINANCIAL CONDITION
Working Capital declined during the first three months of 1999 due to a
significant loss associated primarily with developing a Y2K compliant version of
the Company's proprietary software package. It is not anticipated that the
Company's financial condition will continue to deteriorate at the same rate
during the balance of 1999. If expenses continue to substantially overrun
revenues, the Company will attempt to raise investment capital and/or consulting
contracts to sustain operations. There is no assurance the Company will be
successful in securing such investment capital or consulting contracts.
II. RESULTS OF OPERATIONS
Revenues:
1st Quarter 1999 vs. 1998: 1999 first quarter results declined 17%
from 1998 levels as 1999 first quarter results reflected a slow down in
consulting fees versus 1998. One of the Company's major customers insisted that
the Company's proprietary Touchware product be Y2K compliant by early 1999. As a
result, a major development and testing effort was expended during the first
quarter to create a Y2K compliant version. This focus on Y2K compliance impeded
the Company's efforts to generate revenues from other possible paid consulting
projects.
Expenses:
1st Quarter 1999 vs. 1998: 1999 year-to-date expenses increased 38%
from 1998 levels due primarily to increased use of outside consulting services
needed to create a Y2K version of the Company's proprietary software. The
Company experienced a turnover with a key engineer in mid 1998. The loss of this
engineer resulted in the Company hiring two consulting groups to assist in the
Y2K effort at the end of 1998 and first quarter 1999. The expense of these two
organizations resulted in Consulting Expenses increasing $28,000 relative to
first quarter 1998.
Income:
1st Quarter 1999 vs. 1998: 1999 year-to-date profit decreased $53,071
from 1998 levels reflecting reduced revenues and increased expenses associated
with the Y2K compliance effort noted above. The Y2K impact was significant
because of the loss of a key employee during 1998 and the subsequent need to
contract with two third party consulting organizations that resulted in
additional expenses. Coupled with higher expenses was the loss of revenue
opportunities since all resources were focused on either Y2K development or
testing.
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ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8K
A. Exhibits
Exhibit 27--Financial Data Schedule
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INFOAMERICA, INC.
Date: May 14, 1999 By /s/ Paul F. Knight
-----------------------------------
Paul F. Knight, President and
Chief Financial Officer
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Exhibit Index
Exhibit Description
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27.0 Financial Data Schedule
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 143,467
<SECURITIES> 0
<RECEIVABLES> 60,986
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 202,855
<PP&E> 126,342
<DEPRECIATION> 74,205
<TOTAL-ASSETS> 256,590
<CURRENT-LIABILITIES> 326,473
<BONDS> 0
0
0
<COMMON> 130,363
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 256,590
<SALES> 86,334
<TOTAL-REVENUES> 86,334
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 126,449
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (40,115)
<INCOME-TAX> 0
<INCOME-CONTINUING> (40,115)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (40,115)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
